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Because of the susceptibility of health care programs to fraud and abuse, Congress enacted the Health Care Fraud and Abuse Control (HCFAC) program as part of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Pub. L. No. 104-191. HIPAA requires that the Departments of Health and Human Services (HHS) and Justice (DOJ) issue a joint annual report to Congress on amounts deposited to the Federal Hospital Insurance Trust Fund and amounts appropriated from the trust fund for the HCFAC program. It also requires GAO to submit reports biennially. This, our final report required by law, provides the results of our review of amounts reported as (1) deposits to the trust fund, (2) appropriations from the trust fund and justification for expenditure of such amounts by HHS and DOJ, and (3) savings resulting from expenditures from the trust fund. We also report on the repeated late issuance of the annual HCFAC report as well as the status of our prior recommendations.

Our review of the HCFAC program for fiscal years 2002 and 2003 determined that amounts reported as trust fund deposits--$766 million (fiscal year 2002) and $243 million (fiscal year 2003)--were appropriate. The sources of these deposits were primarily penalties and multiple damages and criminal fines collected from health care fraud cases. Amounts reported as appropriations from the trust fund for HCFAC activities--$209 million (fiscal year 2002) and $240 million (fiscal year 2003)--were consistent with HIPAA. The HHS/OIG received funds within the minimum and maximum amounts allowed by HIPAA to carry out Medicare and Medicaid antifraud activities. The expenditures charged against HCFAC funds by HHS and DOJ for fiscal years 2002 and 2003 were reasonable but the HHS/OIG did not record time charges in its workload systems for all staff that worked on HCFAC activities. Also, DOJ did not record all fiscal year 2003 expenditures in its accounting system so they could be readily identified as HCFAC related. Failure to properly record staff hours and expenditure data could hinder DOJ and HHS in monitoring the uses of HCFAC funds. Some reported cost savings--$19.9 billion (fiscal year 2002) and $20.8 billion (fiscal year 2003) can be considered savings to the trust fund, resulting from trust fund expenditures for the HCFAC program, but most can not. For example, $1.5 billion of the cost savings for fiscal year 2002 and $3.9 billion for fiscal year 2003 are the result of HHS/OIG recommendations and other initiatives since the HCFAC program was created. However, the remaining cost savings continued to be largely the result of actions that predate the HCFAC program and cannot be associated with expenditures from the trust fund for HCFAC. HIPAA requires that HHS and DOJ issue to Congress a joint HCFAC report on January 1 of each year. However, DOJ and HHS have issued the last three reports late and the length of the delay has increased each year. HHS and DOJ cited onerous internal review processes as the reason for late issuance.

Recommendations for Executive Action

Status: Closed - Not Implemented

Comments: According to HHS, HHS did not concur with this recommendation, and accordingly, no formal notifications were made.

Recommendation: To help ensure that the joint HHS and DOJ HCFAC reports are issued in a more timely manner, the Secretary of HHS and the Attorney General should notify congressional committees with oversight responsibility for the HCFAC program of delays in issuing the joint report within 1 month after missing the January 1 deadline and provide updates until the report is issued.

Agency Affected: Department of Justice

Status: Closed - Implemented

Comments: HHS has taken steps to expedite the review process for the annual HCFAC report. According to HHS/OIG, a process was developed that permits HHS to complete the initial draft of the report and transmit it to DOJ before the end of the calendar year, generally by early December. However, even with these improved procedures in place, HHS/OIG stated that the reporting deadline under HIPAA has still proved to be unrealistic. HHS and DOJ have not been able to prepare a meaningful report in the 3 months allotted by HIPAA, especially considering the number of reporting entities involved in both DOJ and HHS. However, DOJ must collect data from 93 judicial districts across the country, and then eliminate duplications to generate accurate total figures. The data is then cross-checked with data from the OIG and from the Medicare Hospital Insurance Trust Fund. HHS was advised by DOJ that this process of receiving and reconciling collection figures has been a chief reason for delay in issuance of the HCFAC report. HHS included in its budget submissions for fiscal year 2009 and 2010 a recommendation that the deadline for issuing the HCFAC report be extended to June. This request will be repeated in future budget submissions.

Recommendation: To help ensure that the joint HHS and DOJ HCFAC reports are issued in a more timely manner, the Secretary of HHS and the Attorney General should develop a more expedited review process.

Agency Affected: Department of Justice

Status: Closed - Implemented

Comments: DOJ has taken steps to expedite the review process for the annual HCFAC report to Congress. According to DOJ, it has decreased the time needed to provide narrative information for the report by providing a time line of action items, responsible parties, and due dates to the responsible parties through the Health Care Fraud Working Group. The status of the annual HCFAC report has been included in the agenda of the Working Group's bi-weekly meetings. However, even with these procedures in place, the January report deadline has proved to be unrealistic for DOJ because of the process for receiving and reconciling information on amounts collected. DOJ must collect data from 93 judicial districts across the country. With the large numbers of multi-defendant and multi-district cases, DOJ must eliminate duplications and generate accurate total figures. Once reconciled internally, the data is then cross-checked with data from the OIG and from the Medicare Hospital Insurance Trust Fund. This process has been a chief reason for the delay in issuing the HCFAC report. Also, according to DOJ, since the recommendations were made, the Consolidated Debt Collection System has been implemented and should streamline gathering and reconciling health care collection data. DOJ believes that extending the deadline for issuing the HCFAC report to June would provide sufficient time to address the data gathering issues. According to DOJ, it concurs with HHS's proposal to change the reporting deadline for the joint HCFAC report from January to June. HHS included in its budget submissions for fiscal year 2009 and 2010 a recommendation that the deadline for issuing the HCFAC report be extended to June. According to HHS, this request will be repeated in future budget submissions.

Recommendation: To help ensure that the joint HHS and DOJ HCFAC reports are issued in a more timely manner, the Secretary of HHS and the Attorney General should develop a more expedited review process.

Agency Affected: Department of Health and Human Services

Status: Closed - Implemented

Comments: According to DOJ, headquarters components and district offices are responsible for monitoring obligations and expenditures of their HCFAC funds. At the beginning of each fiscal year, HCFAC funds are allocated to DOJ components and district offices. Each component establishes an operating plan for HCFAC program costs. Throughout the year, the components monitor obligations and expenditures of these funds by reviewing Expenditure and Allotment reports from the department's Financial Management Information System (FMIS). The components can also generate reports from FMIS with detailed transaction data. Components review these reports on a regular basis to verify that HCFAC obligations and expenditures are correctly reflected in FMIS. For the district offices, the Executive Office for the United States Attorneys (EOUSA) notifies them by e-mail of the amount of their HCFAC allocation for the year and funds control policies and procedures. The district offices are to prepare an operating plan each year and ensure, among other things, that obligations of HFAC funds are reviewed monthly for accuracy and completeness.

Recommendation: To improve DOJ's accountability for HCFAC program expenditures, the Attorney General should develop monitoring procedures to ensure that DOJ components record key HCFAC program expenditure data under the appropriate HCFAC account class in DOJ's accounting system.

Agency Affected: Department of Justice

Status: Closed - Implemented

Comments: The two primary HHS/OIG components involved in HCFAC work--the Office of Investigations (OI) and the Office of Evaluation & Inspections (OEI)--took action to implement the recommendation. In June 2003, OI updated its procedures to help ensure that all key staff hours spent on HCFAC activities are recorded in the workload system. OI Policies and Procedures Manual (OIPPM) includes policies and procedures related to reporting requirements under the Health Insurance Portability and Accountability Act. OIPPM requires OI staff to complete and submit timesheets in a timely manner, and instructs OI staff to report their time as Direct Time under the appropriate OI file number. OIPPM also requires OI managers to examine timesheets to check time usage for reasonableness and consistency. Further, adherence to timekeeping requirements has been included as elements in the Performance Plans of both supervisory and non-supervisory employees of OI. Finally, periodic OI internal inspections include reviews for compliance with timekeeping requirements. In March 2009, OEI updated its procedures for filling out all the information in the OEI's management information system, including completion of timesheets. The procedures instruct OEI employees to record their time to specific inspection numbers. The procedures also contain instructions for managers relating to reviewing their staff's time recorded in the system.

Recommendation: To improve HHS's accountability over HCFAC program expenditures, the HHS Inspector General should require all HHS/OIG components to develop procedures for ensuring that all key staff hours spent on HCFAC activities are recorded in OIG workload tracking systems.

Agency Affected: Department of Health and Human Services

Status: Closed - Not Implemented

Comments: In its official agency comments included in GAO's HCFAC report (GAO-05-134), DOJ stated it does not concur with this recommendation. In May 2009, DOJ reiterated its nonconcurrence.

Recommendation: To help ensure that the joint HHS and DOJ HCFAC reports are issued in a more timely manner, the Secretary of HHS and the Attorney General should notify congressional committees with oversight responsibility for the HCFAC program of delays in issuing the joint report within 1 month after missing the January 1 deadline and provide updates until the report is issued.